- Indian Rupee (INR) holds steady
- RBI forex reserves are being spent quickly
- US Dollar (USD) rises after mixed data
- FOMC rate decision on Wednesday
The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady on Monday after posting modest gains in the previous session. The pair gained 0.06% across last week, settling on Friday at 79.68, trading in a range between 79.01 to 80.03. At 15:00 UTC, USD/INR trades -0.01% at 79.67.
The Reserve Bank of India is using its foreign exchange reserves up at a faster pace than during the 2013 taper tantrum as it attempts to support the Rupee. According to data released on Friday, the RBI sold nearly $38.8 billion from its total forex reserves between January and July.
The US Dollar is rising against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.31% at the time of writing at 110.00 after booking gains of 0.6% across last week. Delving deeper into the data, $19 billion was sold in July alone when the Rupee fell below 80 against the USD.
In 2013 the RBI sold $14 billion from June to September when US bond yields spiked putting pressure on emerging market currencies.
The USD rallied last week after inflation data came in hotter than expected, raising expectations that the Federal Reserve will raise interest rates at a faster, more aggressive pace heading towards the end of the year.
The Federal Reserve meet this week to discuss monetary policy. The US central bank is expected to raise interest rates by 75 basis points, with some even expecting the Fed to raise interest rates by 100 basis points.
In addition, investors will be looking to see see how much the Fed intends to raise interest rates in the final two meetings of the year.
There is no high-impacting US economic data to be released today. Tomorrow sees the release of US housing data which is expected to show continued signs of a slowdown.
